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To calculate the production budget for the second quarter for White Corporation, we’ll go through the following steps based on the data provided:

1. **Determine Budgeted Sales** for the second quarter: Given as **71,000 units**.

2. **Calculate Desired Ending Inventory** for the second quarter:
   - The company’s policy is to keep ending inventory at 5% of the next quarter’s estimated sales.
   - For Quarter 3, the sales forecast is **60,700 units**.
   - Desired Ending Inventory for Quarter 2 = \( 60,700 \times 5\% = 3,035 \) units.

3. **Calculate Total Units Needed** for the second quarter:
   - Total Units Needed = Budgeted Sales + Desired Ending Inventory.
   - Total Units Needed for Quarter 2 = \( 71,000 + 3,035 = 74,035 \) units.

4. **Determine Beginning Inventory** for the second quarter:
   - Beginning Inventory for Quarter 2 will be the ending inventory of Quarter 1.
   - Ending Inventory for Quarter 1 = \( 71,000 \times 5\% = 3,550 \) units.
   - Beginning Inventory for Quarter 2 = 3,550 units.

5. **Calculate Total Units to Produce**:
   - Total Units to Produce = Total Units Needed - Beginning Inventory.
   - Total Units to Produce for Quarter 2 = \( 74,035 - 3,550 = 70,485 \) units.

So, the production budget for Quarter 2 is **70,485 units**.

Would you like further explanation on any part of this calculation?

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Here are 5 related questions to deepen your understanding:

1. How would the production budget change if the sales forecast for Quarter 3 were adjusted?
2. What impact does increasing the desired inventory percentage have on total production requirements?
3. How would the budget change if each unit required more direct material (e.g., 5 pounds instead of 4)?
4. How is direct materials inventory planning integrated into the production budget?
5. How do beginning and ending inventory policies affect cash flow and production costs?

**Tip:** Always keep track of inventory policies and future sales forecasts, as they significantly impact production and inventory planning.

Determine the production budget for the second quarter for White Corporation based on the sales and inventory data provided.

Learn how to calculate the production budget for White Corporation's second quarter. This solution includes steps for determining budgeted sales, desired ending inventory, total units needed, and beginning inventory based on inventory policies. Suitable for high school students and accounting beginners.

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